The 19th Hole

The 19th Hole

April 19, 2022

As I mentioned when I first started contributing to this blog, I love golf. There are so many things I love about it from the complexity of the game itself to the landscapes and nature you encounter when playing it. The fact that the game since its inception has held sportsmanship in the highest regard is also a redeeming quality to me along with the ability to spend time playing with friends and family. Is it still a maddening and infuriating game? Yes, but golf itself still holds many great lessons and metaphors for life. Because none of us knows the events that are to occur in our lives, the best we can do is to plan ahead for what we are doing after our “round”. That is, what is our 19th hole?

Golf courses are 18 holes long meaning there are 18 completely different sections you get to play and try to conquer. Completing this challenge is called finishing a round of golf. In life, your working years can be thought of like a round of golf. You start fresh and full of energy and get off to a hot start. But, you haven’t fully warmed up yet, so you are a bit sporadic through the first few holes as you get dialed in. This is like starting your career. You are excited to enter the workforce after all your years of schooling and you are ready to start working full time. You’re excited about the future and eager to contribute, but you are unrefined. Your skills need time to develop before you can be seen as at the top of your game. You are not yet in your prime. You begin to start investing, because you know about the beauty of compounding interest and the importance of starting early.

As you get closer to the 9th hole you begin to settle in and really get into a groove. Making the turn at the 9th hole is akin to entering your highest earning years in your career. You are experienced and you are at the peak of your abilities which means you need to capitalize on the situation. This is often the time of life when investors contribute the most to their retirement. It makes sense because you save the most when you are making the most. You still have time until retirement, so you can still take on riskier shots to try and make a better score. Staying aggressive when you need to is a good thing in sports and in life, but it is also important to know when tone it back.

You are coming up on the 16th hole. You have three holes left and you are comfortable with your score currently and you do not want to be unnecessarily aggressive as you get near the end. In life it is normal to taper down the risk you take in investing as you get near the end of the accumulation phase of your life. If the target is already acquired, there is no reason to get greedy. Getting greedy results in a lack of focus coming down the stretch and could result in disappointing results. Your even par 72 score could turn into a +4 76 very quickly. Personally I would be elated with either of these scores as I am not a very good golfer, but that is beside the point. Your $1,000,000 saved for retirement could turn to $850,000, thus making the path to your retirement goals a bit tighter. The 19th hole and your ability to enjoy the fruits of your labor become less exciting than you would have hoped.

Every day we help clients answer the question “Am I on the right track?” The answer varies greatly from person to person. From golfer to golfer. The number needed to fully fund a retirement can be extremely different for one person than another. Answering this question involves looking at what you are currently doing. Are you staying aggressive when possible, but scaling it back when necessary? Are you keeping your eye on the 19th hole while also enjoying the round itself?
One thing we stress with people is that while we are here to help with retirement dreams we want you to be able to enjoy the present as well. That’s what makes golf a beautiful metaphor. Yes, the final score is what everyone sees and can be the most important part of a round of golf. But, there are so many little moments in between not to miss. So much to see and enjoy, that we have to appreciate those too. Good financial planning plans for the current and the future. Don’t miss out on that vacation with the kids because you cannot afford it because of how much you are contributing to your IRA. Don’t forget to enjoy the first 18 holes because you are so focused on the 19th.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.